The Insurance Regulatory and Development Authority (IRDA) in India has announced that it is issuing tighter guidelines for policy comparison sites that are also selling insurance products for multiple insurers through an affiliate relationship.
Third party affiliate insurance comparison websites earn a commission from the associated insurance company every time they sell a product through their site. Until now, there have been neither any regulations as to the allowable size of the commission, nor any pre-requisites regarding the candidacy to enter into the business of an insurance affiliate website. The goal of the new guidelines is to provide standardization.
The draft guidelines posted by IRDA have stated that the affiliate website companies will now be required to have a minimum net worth of one million rupees, and they will have to register with IRDA in order to be permitted to legally provide insurance sector-related information on the internet.
Moreover, beginning in February 2012, these affiliate websites will no longer be allowed to post any sponsored content. They will not be permitted to post any information related to rankings, ratings, or endorsements of insurance products, nor will they be able to identify bestsellers.
There will be a 100,000 rupee cap on the commission that is paid to the affiliate sites by the insurance companies. Moreover, IRDA has also put a stop to “reimbursement of expenses” by insurance companies in order to stop the insurers from being able to pay the affiliates under the guise of other purposes such as infrastructure development or training.